IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
CASE NO: 11311/.2018
Reportable
Of interest to other judges
Revised
Date: 20/5/2019
In the matter between:
DEMOCRATIC ALLIANCE
APPLICANT
VS
THE PUBLIC PROTECTOR
RESPONDENT
CASE NO: 13394/2018
COUNCIL FOR THE ADVANCEMENT OF THE
SOUTH AFRICAN CONSTITUTION
APPLICANT
VS
THE PUBLIC PROTECTOR
RESPONDENT
JUDGMENT
TOLMAY, J:
INTRODUCTION
[1]
The Democratic Alliance (the DA) and the Council for the Advancement of the
South African Constitution (CASAC) launched applications based on the same facts.
These applications, which were heard simultaneously, related to the investigating
and reporting by the Public Protector (the PP) on the Free State's Department of
Agriculture Vrede Integrated Dairy Project ("the Project") and sought to review and
set aside the PP's report, because it was alleged that she acted unlawfully and in
violation of her constitutional mandate in terms of section 182(1) of the Constitution
and section 6 and 7 of the Public Protector's Act 23 of 1994, ("the PP Act'').
[2]
On 8 February 2018, the PP released Report, No 31 of 20187/2018 ("the
Report') titled ''Allegations of ma/administration against the Free State Department of
Agriculture - Vrede Integrated Dairy Project". The Report was the culmination of
nearly four years of investigation by the incumbent PP and her predecessor, Adv
Madonsela, into allegations of widespread corruption, maladministration and
impropriety in respect of the Project.
[3]
Both the DA and CASAC in essence sought an order that the PP's report be
reviewed and set aside. Both also sought an order that the PP should pay the costs
of this application in her personal alternative official capacity.
[4]
In Absa Bank Limited & Others v Public Protector and others a personal
costs order was granted against the PP the matter went on appeal to the
Constitutional Court (CC) and the CC has not yet given judgment in that matter. This
judgment was initially held back pending the judgment of the CC, but seeing the
controversy surrounding the Project, and in order to prevent further delay in the
matter, this Court deemed it in the interest of justice to deliver judgment on the merits
and to postpone the judgment relating to costs until the CC has handed down its
judgment in the Absa Bank matter.
[5]
Although the application for review was initially based on the grounds for
review provided for in the Promotion for Administrative Justice Act 3 of 2000 (PAJA),
following the Supreme Court of Appeal’s (SCA) decision in Minister of Home Affairs
and Another v Public Protector of the Republic of South Africa, the Applicants in
the end only relied on the pleaded grounds of legality as the basis for the review.
[6]
Initially the PP filed a notice to abide, but in due course filed answering
affidavits, which contained a full blown attack on the merit of the applications. This
aspect will be d alt with more fully in the Juqgn1ent on costs.
FACTUAL BACKGROUND
[7]
During2012, the Free State Department of Agriculture (the "Department")
launched a provincial policy intervention known as Mohama Mobung, which was
aimed at revitalizing the Free State agricultural sector through investment in various
initiatives. The Project was identified as flagship project to realise such intervention.
It was intended to uplift the Vrede community, through sustainable job creation
opportunities.
[8]
During April 2012 Estina (Pty) ltd (Estina") submitted a business proposal for
the management of the Project at the Krynaauwslust Trust farm. It also represented,
falsely, it would turn out later, that it was in partnership with an Indian company,
Paras, which allegedly had the necessary technical expertise. On 5 July 201.2, the
Department submitted a request for approval to accept Estina's business proposal
and to enter into an agreement with Estina, for the establishment and management
of the Project.
[9]
On 31 May 2013, the amaBhungane Centre for Investigative Journalism
(amaBhungane) published their first article about the Project, this article was titled
"Guptafarm cash cows in Free State". On 7 June 2013, another article titled "Gupta
dairy project milks Free State coffers" was published.
[10]
During October 2013 National Treasury (Treasury) investigated the
Department's contracts with Estina. Some of the findings were disclosed by
amaBhungane on 7 February 2014, after a leaked transcript of an interview between
investigators and the Department's CFO, Ms Dipatle Olamine (Ms Dlamini), was
obtained. This report by Treasury was not made public.
[11]
According to the amaBhungane report the following occurred:
(i) no supply chain procedures were followed;
(ii) no due diligence procedures were performed
(iii) grants were paid directly into Estina's bank account, without any evidence of
how they were spent;
(iv) a feasibility study was only performed, after the contract was signed;
(v) the contract, apparently drawn up by Premier Ace Magashule's ("the Premier'')
legal advisors committed the Department to paying R342 million, while Estina
would only be billed for the balance "if necessary";
(vi) small-scale farmers, who were supposed to be the beneficiaries of the Project,
had only been identified at a much later stage, and could not explain how they
had been chosen; and
(vii)
approval for the Project had been rushed through, despite there being
no budget, no feasibility study and no urgency.
[12]
During 2017, hundreds of thousands of emails revealed the Gupta family's
seemingly corrupt business dealings with the state and politicians ("the
GuptaLeaks·"). These emails were reported on at length by investigative journalists.
They corroborated the earlier 2013 reports that the Project was tainted, not only by
serious irregularities, but also possibly by corruption.
[13]
During mid-2017, more than six months before the PP released her Report,
three further investigative reports were published in the media. These reports, based
on the empils in the GuptaLeaks, provided further evidence of alleged irregularities
and possible corruption linked to the Project. The reports sought to illustrate that the
Gupta family exercised control over the Project and that millions of taxpayers' monies
were pilfered from the public purse. The reports alleged that senior provincial
officials, including the HOD, Mr Thabethe, (Mi Thabethe), MEC Mosebenzi Zwane
(Mr Zwane) and the Premier may have been complicit in the wrongdoing.
[14]
Treasury commissioned an investigation into the Department's contracts with
Estina. The report was dated January 2013, but it must be a typographical error, as
the report itself stated that Treasury was requested on 12 June 2013 to investigate
the possibility of procurement irregularities, relating to the Project. It would seem then
that the correct date of the report must be January 2014.
[15]
In this report from Treasury the following findings were made, regarding the
conduct of specific officials within the Department:
1.1 that Mr Thabethe was involved at "every stage of the identification and
appointment of Estina/Paras". He signed the 99-year rent free lease in
Estina's favour and the agreement with Estina.
1.2 the Department made payment to Estina, without any form of oversight, and
without verifying how funds were spent.
1.3 despite the Project having been justified, on the basis that the beneficiaries
would benefit from it, the Department paid R114 million to Estina, before even
identifying any beneficiaries.
1.4 the Premier and Mr Zwane were identified as being involved in various
suspicious aspects of the Project. In particular, it was stated they enabled,
encouraged and authorised Mr Thabethe to execute the implementation of the
Project.
1.5 both the·Premier and Mr Zwane were involved in concluding the 99 year rentfree lease agreement with Estina.
1.6 the Premier signed a delegation of authority to Mr Zwane, to conclude a rental
greement between the Department and the municipality. Mr Zwane then
delegated further authority to Mr Thabethe.
1.7 the Provincial Executive Committee, which the Premier headed, then
approved Mr Thabethe's request to implement the Project, and supported the
sourcing of additional funding of R84 million from the province.
1.8 mr Zwane, as MEG for Agriculture, personally contacted the MEC for Finance
to request an urgent, expedited R30 million payment to Estina.
[16]
In light of these findings, the Treasury report recommended that disciplinary
action be taken against:
1. mr Thabethe for concluding an unlawful agreement on behalf of the
Department, and for committing funds to the Project on the Department's
behalf, when they were not available; and
2. the Chief Financial Officer, Ms Dhlamini, for failing to put in place proper
financial oversight and controls.
COMPLAINTS
[17]
Between 2013 and 2016, a Member representing the DA in the Free State
provincial legislature, Dr Roy Jankielsohn MP (the "Complainant") lodged a series of
complaints with the PP concerning the Project:
i. On 12 September 2013, the Complainant alleged maladministration in respect
of the agreement between the Free State Province, Estina and its business
partner.
ii. On 28 March 2014, the Complainant submitted a further complaint, alleging
that the government investment of R342 million was subject to hugely inflated
costs, that compliance with environmental requirements was imperilled, and
that between 40 and 100 cows had died and their carcases dumped in a
stream running into the Vrede water catchment area. .
iii. On 10 May 2016 the Complainant submitted yet another complaint, including
further allegations thata. Estina's appointment fell afoul of state procurement processes;
b. Estina misrepresented itself as being in partnership with Paras, a large
lnd.ian company, which could not have been overlooked by those who
approved the project including the Premier;
c. Estina being both partner and implementing agent on the Project was
highly irregular;
d. It appeared that Estina received R183 million for the construction of
infrastructure and purchasing of cattle at inflated costs;
e. Estina was permitted to abscond from the Project without any
accountability, once the FDC took over its management role;
f. The intended beneficiaries of the Project had been side-lined;
g. Serious irregularities revealed by the Treasury investigation against the
HOD and Chief Financial Officer had been ignored by the provincial
government and the Premier; and
h. The Department continued to make monthly payments even after FDC
had taken over the Project.
THE POWERS AND DUTIES OF THE PP
[18]
Before analysing the merits of the applications, it is important to consider the
powers and duties of the PP, and her pivotal role in our democracy,
[19]
The importance of the institution of the PP and her constitutional mandate was
described in Economic Freedom Fighters v Speaker of the National Assembly
and Others; Democratic Alliance Speaker of the National Assembly and Others
where it was stated that the PP is "one of the most invaluable constitutional gifts to
our nation in the fight against corruption, unlawful enrichment, prejudice and
impropriety in State affairs and for the .betterment of good governance" . It is a
constitutional mechanisrn that "gives the poor and marginalised a voice, and teeth
[to] bite corruption and abuse excruciatingly”.'
[20]
That the PP plays a special and indispensable role in South Africa's
constitutional democracy has been illustrated in various instances and is thus trite.
The office of the PP was created under section 181 of the Constitution to "strengthen
constitutional democracy in the Republic ". To achieve this objective, section 181 (2)
of the Constitution requires the PP to be independent and subject only to the
Constitution and the law, and to be impartial. The PP is charged with rooting out
improper conduct in Government for the public benefit. The institution of the PP was
ultimately created to serve the people, and to protect their interests against those in
power, who might be tempted to abuse it for nefarious purposes.
[21]
To perform her constitutional mandate and functions, the PP is vested with
broad investigative and remedial powers. Under section 182(1) of the Constitution,
the PP has the power_,.
"(a) to investigate any conduct in state affairs, or in the public administration in
any sphere of government, that is alleged or suspected to b improper or to
result in any
impropriety or prejudice;
(b) to report on that conduct; and
(c) to take appropriate remedial action".
[22]
Sections 181(2) and (3) of the Constitution provide that the chapter nine
institutions must exercise their powers and perform their functions without fear,
favour or prejudice and oblige all organs of state to assist these institutions "to
ensure the independence, impartiality, dignity and effectiveness of these institutions".
The effect of these provisions is to provide a constitutional guarantee that these
institutions will exercise their powers independently, impartially and effectively.
Section 182 of the Constitution states that the powers of the PP are regulated by
national legislation. The national legislation envisaged in this section, culminated in
the promulgation of the PP Act.
[23]
The PP is entitled to the assistance of other organs of state, where this
may be required under section 181(3) of the Constitution. Other organs of state,
through legislative and other measures, must assist and protect the PP to ensure the
independence, impartiality, dignity and effectiveness of the institution.
[24]
Section 6 of the PP Act, describes the matters that fall within the jurisdiction of
the PP. It also describes how the PP assumes that jurisdiction, when matters are
reported to her office or otherwise come to her attention.
[25]
Under sections 6(4)(a) and 6(5)(a), the PP is competent to investigate, on her
own initiative, or on receipt of a complaint, any alleged maladministration abuse or
unjustifiable exercise of power, improper or dishonest conduct, corruption or
improper or unlawful enrichment in government affairs and the public administration
or in state-owned or public entities.
[26]
The PP Act, defines and expressly circumscribes the instances where the PP
may refuse, or must refuse, to investigate a complaint reported to her office. Section
6 provides for only four such instances:
i. It provides in section 6(3) that:
"(3) The Public Protector may refuse to investigate a matter reported to him or
her, if the person ostensibly prejudiced in the matter is
(a) an officer or employee in the service of the State or is a person to whom
the provisions of the Public Service Act; 1994 (Proclamation 103 of 1994), are
applicable and has, in connection with such matter not taken all reasonable
steps to exhaust the remedies conferred upon him or her in terms of the said
Public Service Act, 1994; or
(b) prejudiced by conduct referred to in subsections (4) and (5) and has not
taken all reasonable steps to exhaust his or her legal remedies in connection
with such matter."
ii. Under section 6(4)(c), the PP m y at any time (prior to, during or after an
investigation) "refer any matter which has a bearing on an investigation to the
appropriate public body or authority''. The PP may, therefore, refer matters to
another, more appropriate public body or authority, instead of investigating the
matter herself.
iii. Under section 6(6), the PP is prohibited from investigating "the performance of
judicial functions by any court of law''.
iv. Section 6(9) restricts the PP's power to entertain matters reported more than
two years after the occurrence of the incident or matter concerned.
[27]
Sections 7 of the PP Act describes the investigative powers of the PP, Scrutiny
of these sections reveals the PP's extensive investigative powers, which includes the
power to subpoena any person to give evidence on affidavit or in person, to produce
documents, or to appear as a witness.
[28]
The PP is also vested with the power to enter, or authorise another person to
enter any building or premises for purposes of an investigation and to search and
seize anything on those premises that in her opinion has a bearing on the
investigation, subject to obtaining warrant as set out in section 7A.
[29]
Under section 7(3) of the PP Act, she may call upon any person,· at any level
of government or performing any public function, to assist her in the performance of
her functions with regard to a particular investigation. This includes the·power to
designate any person to conduct an investigation and to report to her. To emphasise
both the importance and power of the PP, section 11 of the PP Act stat s that
contempt of the PP is an offence.
[30]
The PP must, like any public functionary, exercise her powers and functions
lawfully in compliance with her constitutional and statutory mandate and duties. The
proper and effective performance of the functions of the PP is of particular
importance, given her constitutional mandate and the extraordinary powers that are
vested in her office. When the PP fails to discharge her mandate and duties, the
strength of South Africa's constitutional democracy is inevitably compromised and
the public is left without the assistance of their constitutionally created guardian. It
means that vital constitutional check against abuses of public power is lost.
[31]
It is for these reasons that the Court stated in Absa Bank that "The Public
Protector is subject to a higher duty and higher standards than ordinary
administrators". Thus the failure by the PP to perform her functions properly and
effectively is, therefore, a matter of grave constitutional importance.
[32]
In Public Protector vs Mail & Guardian, he SCA specifically addressed the
nature of the PP's duty to investigate complaints or suspicions of improper conduct
and abuses of power in the public administration. The SCA held that, when the PP
investigates a matter, she is obliged to be proactive, impartial and determined in her
investigations and to retain " an open and enquiring mind'.
[33]
The Court described the benchmark of 'an open and enquiring mind' as
follows:
" ... That state of mind is one that is open to all possibilities and reflects upon
whether the truth has been told. It is not one that is unduly suspicious but it is,
also not one that unduly believes. It asks whether the pieces that have been
presented fit into place. If at first they do not then it asks questions and seeks
out information until they do. It is also not a state of mind that remains static. If
the pieces remain out of place after further enquiry then it might progress to
being a suspicious mind. And if the pieces still do not fit then it might progress
to conviction that there is deceit ..."
[34]
It was argued, and correctly so, that this means that, when the PP conducts
an investigation she is not entitled to be passive, supine and static in her approach.
Nor can she fail to address complaint or allegations without good cause, or narrow
the $cope of investigations to the point that they do not meaningfully address the
allegations and prjma facie evidence of misconduct and impropriety in public affairs,
[35]
In Mail and Guardian the Court further described the importance of public
confidence in the PP's duty to be proactive in her investigations. The following was
said in this regard:
"The Public Protector must not only discover the truth but must also inspire
confidence that the truth has been discovered. It is no less important for the
public to be assured that there has been no malfeasance or impropriety in
public life, if there has not been, as it is for malfeasance .and impropriety to be
exposed where it exists. There is no justification for saying to the public that it
must simply accept that there has not been conduct of that kind only because
evidence has not been advanced that proves the contrary. Before the Public
Protector assures the public that there has not been such conduct he or she
must be sure that it has not occurred. And if corroboration is required before
he or she can be sure then corroboration must necessarily be found. The
function of the Public Protector is as much about public confidence that the
truth has been discovered as it is about discovering the truth."
[36]
It follows that when the PP receives complaints of impropriety or abuse of
public office, she is obliged to use the powers vested in her. This will include her
power to call for assistance from organs of state, or to refer matters to other
appropriate authorities, to ensure that the complaint is properly and effectively
addressed. Where an investigation is required, it should be conducted s
comprehensively a possible, in order to inspire public confidence that the truth has
been discovered, that her reports are accurate, meaningful and reliable, and that the
remedial action that she takes is appropriate. That means, as the CC held in
Nkandla, " nothing less than effective, suitable, proper or fitting to redress or undo
the prejudice, impropriety, unlawful enrichment or corruption, in a particular case".
Thus, if the remedial action does not meet these criteria, it will not be appropriate.
[37]
The purpose of the PP's office is, in general terms, ''to ensure that there is an
effective public service which maintains a high standard of professional ethics, and
that government officials carry out their tasks effectively, fairly and without corruption
or prejudice."
[38]
The failure to have regard to relevant facts and considerations can result in
the irrationality of a decision. In Democratic Alliance v President of South Africa,
the CC devised a three-part test to determine when the ignoring of facts or
considerations leads to irrationality:
1. whether the factors ignored are relevant;
2. whether the failure to consider the material concerned is rationally related to
the purpose for which the power was conferred; and
3. whether ignoring relevant facts is of a kind that colours t e entire process with
irrationality and thus renders the final decision irrational.
[391 In Chairman of the State Tender Board v Digital Voice Processing (Pty) Ltd
it as explained that, "in order to be rational, the decision must be 'based on accurate
findings of fact and a correct application of the law.”
[40]
It is against this legal frc;1mework that the PP's report and proposed remedial
actions must be considered, to determine whether the requirements of legality have
been met.
THE PUBLIC PROTECTOR'S REPORT
[41]
On 8 February 2018, the PP published her Report. It is of importance to n9te
that a provisional report was done by the PP's predecessor, Adv Madonsela, as
these two reports have to be compared, within the factual matrix of what occurred in
the implementation and execution of the Project. A comparison of the findings,
conclusions and proposed remedial action is inevitable. The provisional report was
included in the Rule 53 record and was dated November 2014.
[42]
The PP described the scope of her investigation in the Report. She recorded
that she investigated only the following three issues:
-
"Whether the Department entered into a Public Private Partnership (PPP)
agreement for the implementation of the Vrede Dairy project";
-
"Whether the Department failed to manage and monitor implementation of the
terms of the agreement in relation to budget evaluation, expenditure control
and performance by Estina”; and
-
"Whether the prices for goods and services ·procured were inflated,
specifically alleged expenses. in respect of construction, processing
equipment, procurement of cows and administration cost ".
[43]
Seen within the context of the factual background, the scope of the
investigation, as identified by the PP, seems to be too narrow and seems to ignore
the issues raised in the report from Treasury, the media reports as well as the
complaints lodged. There does not seem any logical and legitimate explanation for
the narrowing of the scope of the investigation.
[44]
The PP also recorded in the Report that she did not investigate certain issues,
due, she said, to capacity and financial constraints experienced by her office. The
issues not investigated were the following:
a) the cause of the alleged deaths of cattle. She said that the Minister of Water
Affairs intervened and issued instructions on the removal of the dead cows;
b) issues emanating from the complaint sent on 10 May 2016 [i.e., the
complainant's third complaint]; as the issues pertaining to the investigation
were already identified;
c) the issue of value for money obtained by the Government in terms of the
agreements, as it was, investigated by Treasury;
d) the newspaper articles on the emails reported, relating to the Gupta family,
that surfaced around June 2017, referring to the Project were noted, but did
not form part of the scope of her investigation;
e) how the money transferred to Estina was spent by Estina, as the Directorate
for Priority Crime was dealing with the issue;
f) the matter relating to beneficiaries who were intended to benefit from the
project was not investigated. Her reason for this was an alleged lack of
information.
[45]
It was accordingly not in dispute that the PP did not investigate the DA's third
complaint. It was also not in dispute that the PP did not do the following:
a. investigate who the true beneficiaries of the Vrede Dairy project were;
b. investigate the role played by MEC Mr Zwane, the Premier, Mr Thabethe and
Ms Dlamini in pushing through the project;
c. consider the allegations that were in the public domain that suggested that Mr
Zwane and the Premier had corrupt relationships with the Gupta family and
received kickbacks directly or through their family from the Gupta family,
following the Project;
d. consider how President Zuma allegedly abused his position as President of
the Republic to protect and promote the officials in the Free State province
that had allegedly served the interests of the Gupta family through the Project;
e. address the fact that the Free State Provincial Government under the Premier
had failed to implement National Treasury'$ recommendation that disciplinary
action be taken against the Department of Agriculture's HOD and CFO.
[46]
The PP also failed to investigate the impact of the Project on the so-called
"farm empowerment" partner promoted by Mr Zwane, or the impact on the
approximately eighty beneficiaries, who were supposed to have benefited as
stakeholders in the Project.
[47]
Her decision to limit the scope of her investigation so dramatically was
irrational as it side stepped all the crucial aspects regarding the complaints and led to
a failure on her part to execute her constitutional duty.
[48]
In her report the PP indicated that on assuming office during October 2016,
she took the following steps regarding the investigation into the Project:
a. she sourced four additional documents - namely, a list of employees at the
Project; the milking records for the Vrede Dairy Farm from ·1 April 2016 to 31
March ,2017; the financial statements for the Vrede Dairy Farm from
September 2014 to March 2017; and a company report from CIPC on
Vargafield (Pty) Ltd,
b. she held three interviews, namely with the Free State Department of
Agriculture, the Manager of Studbook, SA Holstein Breeders Association and
with the CFO of the Free State Development Corporation,
c. she conducted one inspection in loco at the Vrede Dairy Farm.
d. she consulted one website, the CIPC website (to confirm the details of the
Mohoma Mobung company).
[49]
The steps taken by her seem wholly inadequate, considering the magnitude
and importance of the complaints raised.
[50]
The PP claimed in her report not to have had information relating to the
beneficiaries. However during December 2017 the leader of the DA, Mr Mmusi
Maimane, attended the office of the PP. He took along several of the intended
beneficiaries of the Project. At the meeting the lead representative of the
beneficiaries was introduced to the PP, and her assistant was requested to take
down the beneficiaries' contact detai.ls to facilitate future engagement with them. The
record shows that the information was indeed obtained, and in the possession of the
PP, and formed part of the Rule 53 record supplied by the PP. The DA also furnished
the PP with the Department's list of intended beneficiaries, together with a letter of
complaint from representatives of the Beneficiaries' Steering Committee. In addition
to recording the beneficiaries' identity numbers and addresses, the list also included
their cell-phone numbers.
[51]
Despite having access to this information the PP made no effort at all to
engage with the intended. beneficiaries. She, in her answering affidavit laid the
blame on the DA and said that the DA failed to provide her office with the promised
assistance to obtain statements from the beneficiaries.
[52]
The DA denied this and stated that Mr Maimane agreed to assist the PP,
where possible. It was agreed that Mr Maimane's office would be the contact point for
communications from the PP. However, Mr Maimane did not give any undertaking to
obtain statements from the beneficiaries for the PP's office, as is alleged. The PP
requested no further assistance from the DA at all. One would have expected her
office to request assistance if she needed it. This is yet another inexplicable failure
on the part of the PP.
[53]
In the context of what occurred some consideration must be given to the
provisional report and how the final report deviated from it. As was detailed in the
supplementary founding affidavits filed by the DA and CASAC, there are differences
between the provisional report and the final report issued by the PP in February
2018. Some of the issues for investigation according to the DA and CASAC seemed
to be narrowed, and several findings and remedial steps proposed were omitted from
the final report. The PP’s response in answer to the differences was:
"Whatever the difference in findings may be, they have not had any material
effect in the lawful remedial action that I have taken within the powers
conferred on me by the Public Protector Act and the Constitution."
[54]
I do not deem it necessary to deal in detail with all these differences, but what
is of importance, is the impact of these differences on the legality of the report and
the appropriateness of the remedial action proposed by the PP.
[55]
The first issue identified by the PP, was whether the Department improperly
entered into a Public Private Partnership (PPP) agreement for the implementation of
the Project. The provisional report prepared by Adv. Madonsela identified, the first
issue as “Whether or not the Treasury Prescripts in respect of Public Private
Partnerships were adhered to and whether or not the contribution of 40% of the
funds for an allocation of 4 9% of the shares in the company was contrary to
Treasury prescripts".
[56]
Adv. Madonsela found that the prescripts in respect of the procurement of the
agreement were not adhered to. This was confirmed by the Treasury report.
According to Adv Madonsela this constituted maladministration. She pointed out, that
after this report, which found that the agreement was unlawfully entered into. that the
Free State Department of Agriculture proceeded to pay a further R143 950 million to
Estina. She concluded inter alia that the conduct of the accounting officer was
improper and constituted maladministration and an abuse of power. It is patently
obvious that this conclusion was correct. It is inconceivable that, following Treasury's
report, the Department could, with impunity, proceed to pay out millions of rands to
Estina and that the PP in her final Report failed to address this gross irregularity.
[57]
In the final Report, the PP redefined the primary issue as follows; "Whether
the Department improperly entered into a Public Private Partnership agreement for
the implementation of the Vrede Dairy project in violation of treasury prescripts".
[58]
The PP explained her narrowing of the issue in her answering affidavit as
follows:
"The reason for this change is that National Treasury had already investigated
the matter of adherence to National Treasury Prescripts and made a finding.
With our limited resources, it would have been imprudent to duplicate an
investigation into the same issue."
[59]
One must however keep in mind that Treasury had already found gross
irregularities and non-compliance with procurement law, and had made
recommendations, which had not been acted on by the Department or the Provincial
Government. This should have been of great concern to the PP given her
constitutional duties. She should have investigated the failure of the Department and
the Provincial Government and she should have addressed those irregularities and
failure to comply with procurement procedures. The excuse of financial constraints
preventing her from investigating certain aspects, being an impediment, will be dealt
with later on, but financial constraints cannot explain her failure to act decisively andin accordance with the powers afforded to her.
[60]
Significantly, whereas the provisional report had sought to give effect to
Treasury's investigations and recommendations, the PP did not accept these
findings. She instead found, that compliance with the requirements for concluding a
PPP was not required for the Estina agreement. On what basis she could justifiably
come to such a conclusion is unclear. It points either to ineptitude or gross
negligence in the execution of her duties.
[61]
She furthermore, removed the remedial action that had been proposed in the
provisional report, which required the MEC to implement the recommendations in the
Treasury report.
[62]
On the first issue, as redefined, the PP found that while "the initial impression
created was that the agreement between the Department and Estina was a publicprivate partnership", this was not the case. The only basis for this conclusion, is the
finding of Treasury's report that the arrangement was neither a PPP nor a sole
provided agreement.
[63]
The PP followed the same reasoning by citing other formal requirements for a
PPP that w re not followed in respect of Estina, including the critical requirement of
prior approval from Treasury, to support her conclusion that the project was not a
PPP.
[64]
The PP missed the point completely and erred in coming to the aforesaid
conclusion, When Treasury stated that "The investigation has revealed that the
Vrede project is neither a PPP nor a sole provider arrangement", it dearly meant,
when read in proper context, that it was neither a valid PPP nor a sole provider
arrangement, as the supply chain management pr9cesse$ prescribed for them were
not followed. This inference is the only logical one in the broader context of the
Report. Treasury did not find, as suggested in the final Report, that the "inherent
requirements" for a PPP were not present but went further and act1;1ally pronounced
on the legality of the Project.
[65]
It also did not follow from the Treasury's findings that the Department was not
required to follow the processes prescribed for a PPP arrangement, in concluding the
Project as the PP found. The Department was obliged to follow the prescribed
processes, and it acted unlawfully in not .doing so.
[66]
The conclusion by the PP was Clearly irrational. The fact that the PPP was not
registered did not determine or change the nature of the commercial arrangement.
Instead it suggested that, if the true nature of the commercial transaction was indeed
a PPP, then there were serious irregularities in the conclusion of the transaction and
that should have bee. n the focus of her investigation.
[67]
One would have expected the PP to have engaged in an examination of the
true, inherent nature of the agreement entered into between the Department and
Estina. The PP did not enquire any further into the nature of the irregularities
committed, or whether the agreement and execution thereof resulted in
misappropriation of public funds. This is inexplicable seen in the broader context of
her duties and powers.
[68] The PP removed all findings contained in the provisional report, against the
Department, of non-compliance with statutory requirements. She relegated these too
vague and inconclusive "observations" in her report.
[69]
The PP considered whether the Department failed to manage and monitor
implementation of the terms of the agreement in relation to budget evaluation,
expenditure control and performance by Estina. In addressing this issue, the PP.
recorded, repeatedly, that the Department failed to finish supporting documents to
verify the correctness of the financial statements it produced, including invoices and
proof of payments for goods and services procured. However, she failed to exercise
her statutory powers to obtain the Department or Estina's records: She issued no
subpoenas for bank records, and accounts; She did not calI any persons to appear
before her to give evidence on the expenditure, accounting thereof, and services
procured; She conducted no search to obtain such evidence. None of this was
denied by her in her answering affidavit instead, the PP said the following:
"In 2014 my office was informed by the department that information or
documents required w re never in possession of the department, but that of
Estina. An attempt to get documents or information from Estina was
unsuccessful, as Estina had closed shop and the building out of which it used
to operate had been abandoned and vacated. As a result of the about), my
office was unable to secure the documents by way of subpoena or search and
seizure".
[70]
There was no explanation for why the PP failed to subpoena any of the
implicated officials to answer questions under oath or to produce whatever records
the Department was required by law to retain, in particular, by the Public Finance
Management Act.
[71]
The PP could have conducted search and seizure at the Department and the
offices of the implicated officials, to obtain whatever evidence might have been
available a to the implementation and management of the Project;. The provisional
report had required other investigative agencies to conduct such investigations,
subject to the PP's oversight This requirement was however removed from the final
Report and thus it was never done.
[72]
Therefore, instead of productively investigating the nature and extent of the
irregularities committed to uncover the facts, the PP merely drew "an inference" that
"no management and monitoring of the project in relation to budget, expenditure
control and performance by the Department before the project was handed over to
the FDC".
[73]
The PP's findings on this issue, ultimately, were as follows:
“6.2.1 The allegation that the Department failed to manage and monitor
implementation of the terms of agreement is substantiated.
6.2.2 No documents and/or policies or measures were provided by the
Department that proper financial control and risk management of the Project
were in place. The Public Protector could find no evidence or indication that
the Accounting Officer invoked the provisions of the agreement in respect of
the control over the Project and this raises serious concern. This concern was
supported by the report of the Accountant General and the lack of effective,
efficient and transparent systems of financial and risk management and
internal control amounts to gross negligence and maladministration.
6.2.3 No supporting evidence in the form of actual invoices/receipts was
submitted to substantiate the expenditure as claimed in the financial
statements submitted except for 9 invoices for procurement of cattle.
6.2.4 The evidence outlined earlier points to gross irregularities in ensuring
·the effective and efficient performance of the agreement and resulted in
maladministration.
6.2.5 From the above it is clear that this amounts to gross negligence and also
constitutes improper conduct as envisaged in section 182(1) of the
Constitution and rnaladministration as envisaged in section 6 of the Public
Protector Act."
[74]
The aforesaid must be compared with the provisional report which found:
"8.2.2 No supporting evidence in the form of actual invoices/receipts was
submitted to substantiate the expenditure as claimed in the financial
statements submitted. In fact the payment vouchers for the disbursement of
the R.173,950 million to EST/NA were substantiated only by the project
proposal. of EST/NA/PARAS and the agreement concluded between the
Department and ESTINA.
8.2.3 From. the above it is clear that this amounts to gross negligence,
maladministration and ultimately irregular expenditure in terms of Treasury
prescripts. · · · · ·
8.2.4 In terms of the Regulations a PPP agreement does not divest the
accounting officer of the responsibility for ensuring that the relevant
institutional function is effectively and efficiently performed in the public
interest. The evidence I have outlined earlier points to gross irregularities in
ensuring the effective and efficient performance of the agreement and
resulted.in irregular and fruitless expenditure." [Court's emphasis].
[75]
The finding in paragraph 6.2.2 of the final report is identical to the finding i t1
the provisional report. However, the findings of irregular expenditure in the
provisional report were omitted from the final report. In the light of all the facts, this
omission by the PP is inexplicable. One may justifiably ask whether this was. done
for some ulterior purpose. Unfortunately no explanation was given by the PP for
these changes.
[76] The PP also determined whether the prices for goods and services procured
were inflated. On this issue the provisional report stated that independent evidence
indicated that, prices of processing equipment and the cows purchased were
considerably higher than. market value, which confirmed that proper procurement
processes were not followed. It indicated that lack of proper monitoring and control
measures were the reasons for discrepancies noted in the financial statements,
which in tum pointed to gross negligence and maladministration which led to fruitless
expenditure.
[77]
These findings were revisited by the. PP. In the final Report, there are no
findings of inflated prices and irregular and fruitless expenditure. The revised finding
reads simply as follows:
"6.3.1 The allegation that the prices for goods and services procured were
inflated, specifically expenses in respect of construction, processing
equipment, procurement of cows and administration costs is difficult to
determine".
[78]
The following explanation is given in the answering affidavit for this
conclusion:
"6.3.1.1. ESTINA did not follow public procurement processes when procuring
the Services of the service providers in the project;
6.3.1.2. Due to the lack of resources and financial constraints, the Public
Protector was unable to conduct a comprehensive investigation in order to
determine the fair market value for goods and services procured,' and
6.3.1.3. The Public Protector was not provided with all the invoices and proof
of payments for the goods and services procured by Estina on behalf of the
Department.”
[79]
The PP's contention that she was unable to obtain market prices is
unsustainable. There was no reason, as the DA argued, why one of her staff
appointed for investigations in her office could not assess the market value of the
goods and services procured. Assessing the market value of the goods procured
requires obtaining quotations from suppliers. The DA’s staff performed this task to
assess the market value of the cattle procured, and furnished this information to the
PP in the complainant's second complaint. It seems that the PP chose to simply
ignore the information supplied to her and then blamed financial constraints for her
failure to execute this simple task.
[80]
Furthermore, Treasury’s report had included a report by a senior economist at
AgriSA on the costs and value for public money associated with the Project. The
senior economist, Mr Maree, considered the project proposal, business plan and
feasibility study that Estina provided to the Department. Mr Maree raised several red
flags, in his assessment which ought to have been investigated further.
[81]
Mr Maree recommended that a detailed cost analysis of the project should
have been be done on the basis of more detailed information. However, on the
information available, Mr Maree advised that the costs associated with the project
were very high, with a good probability that the state would not receive value for
money on the project in its current state.
[82]
Mr Maree's full report was exhibit 27 to Treasury's report, which the PP stated
she never received. lnstead of requesting Treasury. to furnish her with Mr Mare 's
report and the other annexures, the PP merely stated that resource constraints in her
office made it impossible for her to determine whether fair market value for goods
and services was obtained. She did not explain why she simply did not request
Treasury to supply her with the report. The PP made no mention at all of Mr Maree's
assessment, even though she had Treasury's report which summarised the outcome
of his assessment.
[83]
The lack of invoices and proof of payments furnished by the Department were
also not a satisfactory explanation. The PP should have exercised her statutory
powers to obtain the necessary financial records from the Department and Estina to
determine what was paid for, to whom, and what amounts were paid.
[84]
The failure of the PP to execute her constitutional duties in investigating and
compiling a credible and comprehensive report points either to a blatant disregard to
comply with her constitutional duties and obligations or a concerning lack of
understanding of those duties and obligations.
CAPACITY AND FINANCIAL CONSTRAINTS
[85]
The PP explained in her affidavits that capacity and, financial constraints
impeded her office's capacity to investigate the complaints appropriately. One cannot
disregard the fact that the PP's office, as many other state institutions' capacities. are
often constrained by inadequate financial .and other resources.
[86]
The Court's approach to evaluating a defence that budgetary constraints
precluded a public functionary from fulfilling its constitutional obligations was dealt
with in Rail Commuters Action Group v Transnet Ltd t/a Metrorail. The CC
adopted a context-sensitive, reasonableness standard. It enquired whether the
functionary had shown that it had taken all reasonable measures within its available
resources. The Court held:
''.. .an organ of State will not be held to have reasonably performed a duty
simply on the basis of a bald assertion of resource constraints. Details of .the
precise character of the resource constraints, whether human or financial, in
the context of the overall resourcing of the organ of State will need to be
provided. The standard of reasonableness so understood conforms to the
constitutional principles of accountability, on the one hand, in that it requires
decision-makers to disclose their reasons for their conduct, and the principle
of effectiveness on the other, for it does not unduly hamper the decisionmaker's authority to determine what are reasonable and r3ppropriate
measures in the overall context of their activities. "
[87]
In City of Johannesburg Metropolitan Municipality vs Blue Moonlight
Properties 39 (Pty) Ltd & another, the CC responded to a claim by the City of
Johannesburg that it did not have sufficient resources to provide for temporary
emergency housing. The CC rejected this contention, holding that "it is not good
enough for the City to state that it has not budgeted for something, if it should indeed
have planned and budgeted for it in the fulfilment of its obligations''. The CC also
upheld the SCA's findings that the City had not shown that it lacked the resources to
meet its obligations. In its judgment, the SCA emphasised, inter alia, the fact that the
City’s claims about the affordability of meeting demands were made "in the vaguest
possible terms", and that the City did not state that it was unable to reallocate
resources within its available budget.
[88]
The PP in her answering affidavit did not set out supporting facts to illustrate
why a prop r investig91tion could not be accomplished. This made it very difficult to
determine whether in this instance, this defence should be accepted as a bona fide
impediment to her ability to execute her duty.
[89]
In this instance there was not only a provisional report by her predecessor, but
Isa a report by Treasury that clearly indicc1ted misappropriation of funds on an
astronomical scale. There were also countless media reports implicating certain
individuals and linking them to the project of state capture. All of these should have
assisted the PP in her investigation, and should have limited the financial impact of
the investigation on her resources.
[90]
One must consider whether taking certain steps, during the investigation
would have had caused a huge financial drain on the PP's resources. It would seem
that, if one considers the provisional report and Treasury's report, a huge amount of
work had already been done, which should have limited the expenses that the PP
had to incur to properly and adequately complete her investigation.
[91]
The PP's most blatant failure was to not properly investigate the
circumstances surrounding the beneficiaries of the Project, this she also blamed on a
lack of resources, The PP had the names and telephone numbers of some twenty
beneficiaries, and some even visited her offices with Mr Maimane . Yet no attempt
was made to get a statement from any of them. In this regard she put the blame on
the DA and said that they undertook to get the statements. Leaving the duty in the
hands of a political party was totally inappropriate and could potentially have
impacted on the impartiality of any statement so obtained. Whether the DA did give
such an undertaking or not, is in my view, irrelevant, as it was the duty of the PP to
follow up and obtain those statements. The beneficiaries were the people who should
have taken centre stage in this investigation, as they were the people, the vulnerable
ones, for which her office was specifically created and who were deprived of an
opportunity to benefit and better their circumstances. Instead they were ignored and
their interests were relegated to a mere peripheral issue. It is an absolute disgrace
that some, as yet unidentified people, benefited, while the poor and the marginalized
were yet again robbed of an opportunity to better their circumstances.
[92]
The exercise to obtain their statements could not have caused a significant
strain on her resources. In any event seeing that they were supposed to benefit from
the Project, any resources that she had should have been spent to obtain their input.
She had their particulars and telephone numbers, one would have expected her
office at least to have contacted them and to have attempted to obtain statements
from them. Their story has not been told, neither did they get any benefit from this
project. Yet R342 million was paid to entities connected to this Project and unknown
people were enriched. This, in my view, was the most significant failure of the PP to
execute her constitutional duty in this investigation.
[93]
As far as the missing annexures from Treasury's report were concerned, to
request these annexures could not have required more than an email. These
annexures were essential, and she should have known that, it could have assisted
her, and would have enabled her to limit the costs that could have been incurred by
her own office. Yet no attempt at all was made to obtain these very important
documents.
[94]
Interviewing and taking statements from the implicated officials and
interviewing the journalist who had reported on the project, seems to me to be quite
simple and could not have resulted in huge expenditure, The PP's failures to
undertake these simple and cost effective measures are to put it lightly, of serious
concern, as it may point to a concerning incomprehension of the nature and extent of
her obligation towards the people of this country and her obligations in terms of the
Constitution and the PP Act.
[95]
Whatever her office's resource constraints were, they could perhaps
conceivably explain the narrowing of the scope of the investigation, but never explain
and justify the irrational and arbitrary findings and material errors of law in the
Report, or the inappropriate and ineffective investigation executed by her office.
THE DISCRETION TO "OPT OUT”
[96]
The PP in addition stated in her affidavit that she exercised her discretion to
opt out'' and not to investigate. Her suggestion in the answering affidavit that she
deferred the investigation stood in direct contradiction with her statement that she
decided to "opt out".
[97]
The PP contended that she has "a very wide discretion" under the PP Act to
''opt-out” and not to investigate even those complaints that fall within her jurisdiction.
On this basis, the PP contended that it was open to her to refuse to investigate the
third complaint at all.
[98]
This is not a proper reading of the constitutional and statutory provisions
contained in the legislation. The language used in the Constitution and the PP Act in
describing the PP's powers and functions make it clear that the investigative power
vested in the PP is coupled with a duty to exercise that power. It is accordingly clear
from a proper reading of the Constitution and the PP. Act, that the PP does not have
such a wide discretion, as she claimed, to refuse to investigate a complaint that falls
within her jurisdiction.
[99]
If one compares the language used in section e(4)(a) and section 6(4)(b) of
the Act the following transpires. Whereas section 6(4)(b) expressly confers a
discretion on the PP in respect of the remedial action to be taken, section 6(4)(a)
confers no such discretion in respect of the investigation of conduct under her
jurisdiction.
[100] This interpretation is also supported by the wording of section 7(1) of the Act,
which defines the PP's investigative power. Section 7(1) provides:
"(1)(a) The Public Protector shall have the power, on his or her own initiative
or on receipt of a complaint or an allegation or on the ground of informe1tion
that has come to his or her knowledge and which points to conduct such as
referred to in section 6 (4) or (5) of this Act, to conduct a preliminary
investigation for the purpose of determining the merits of the complaint,
allegation or information and the mariner in which the matter concerned
should be dealt with.
(b)(i) The format and the procedure to be followed in conducting any
investigation shall be determined by the Public Protector with due regard to
the circumstances of each case."
[101] This provision confers a discretion on the PP to determine the format and
procedure to be followed in investigating a complaint. It also afford the PP a
discretion after a preliminary investigation, to determine the merits of the complaint
and the manner in which the matter concerned should be dealt with. It does not,
however, permit the PP .to decline to conduct any investigation at all and in the
context of her duties it would be inconceivable that the PP could have discretion to
choose to ''opt out" in the context of the factual background of this case.
[102] The effect of these provisions, it seems to me, is that when the PP receives a
complaint reporting a matter within her jurisdiction, she must conduct at least a
preliminary investigation to determine the merits of a complaint, unless one of the
exceptions in section 6 applies. Only after conducting a preliminary investigation of
the merits. may she, for good reason, decline to investigate the matter further.
Should she find that there is merit in the complaint that requires further investigation,
she is obliged to either investigate the matter herself, or to refer the matter for further
investigation to another appropriate authority. Should she choose to undertake a
further investigation, she must investigate the matter proactively and effectively.
[103] This textual interpretation must be favoured when the empowering provisions
are read purposively and in light of section 39(2) of the Constitution, that is, in the
manner that best promotes the spirit, purport and objects of the Bill of Rights. The
interpretive injunction in section 39(2) requires the Court, not only to avoid an
interpretation that may limit rights in the Bill of Rights, but also to prefer any
interpretation that best promotes those rights.
[104] The CC has interpreted statutory provisions that confer a power on a
functionary as 'a power coupled with a duty to use it' in several cases. In Saidi and
Others v Minister of Home Affairs and Others the CC held that section 22(3) of
the Refugees Act imposed a duty on Refugee Reception Officers to extend asylum
permits pending finalisation of the judicial review of a decision refusing asylum.
Section 22(3) reads as follows:
"A Refugee Reception Office may from time to time extend the period for
which a permit has been issued ... or amend the conditions subject to which a
permit has been so issued.
The CC held that interpreting the “may" as a "must" was required, as "This
interpretation better affords an asylum seeker constitutional protection whilst awaiting
the outcome of her or his application".
[105] Interpreting the PP's power to investigate· a complaint of improper conduct as
a 'power coupled with a duty to investigate', better promotes the constitutional
objects and the rights in the Bill of Rights. It also ensures the impartiality and
independence of the PP, by ensuring that the PP cannot be selective regarding which
investigations to conduct and cannot be subjected to pressure by any person not to
investigate complaint.
[106] This interpretation also ensures that complaints about corruption, abuses of
public power and resources are properly investigated, exposed and remedied. Since
corruption and abuses of power for selfgain inevitably impact on the realisation of the
rights in the Bill of Rights, In Glenister v President of the Republic of South Africa
the following was held:
" ... Corruption has become a scourge in our country and it poses a real
danger to our developing democracy. It undermines the ability of the
government to meet its commitment to fight poverty and to deliver on other
social and economic rights guaranteed in our Bill of Rights."
In the majority judgment, Moseneke DCJ and Cameron J stated:
"There can be no gainsaying that corruption threatens to fell at the knees virtually
everything we hold dear and precious in our hard-won constitutional order. It blatantly
undermines the democratic ethos, the institutions of democracy, the rule of Jaw and
the foundational values of our nascent constitutional project. It fuels
maladministration and public fraudulence and imperils the capacity of the State to
fulfil its obligations to protect, promote and fulfil all the rights enshrined in the Bill of
Rights. When corruption and organised crime flourish, sustainable development and
economic growth are stunted. And in turn, the stability and security of society is put at
risk."
[107] The investigation of such complaints is vital to the protection and promotion of
right in the Bill of Rights, The investigation of complaints submitted to the PP is also a
key mechanism for promoting the foundational constitutional democratic principles of
accountability, openness and responsiveness and the principles governing public
administration.
[108] The importance of the investigations and remedial action of the PP for the
protection of the rights in the Bill of Rights, was emphasised by the Constitutional
Court in Nkandla. It was stated that:
"In the execution of her investigative, reporting or remedial powers, she is not
to be inhibited, undermined or sabotaged. When all other essential
requirements for the proper exercise of her power are met, she is to take
appropriate remedial action. Our constitutional democracy can only be truly
strengthened when: there is zero tolerance for the culture of impunity; the
prospects of good governance are duly enhanced by enforced accountability;
the observance of the rule of law; and respect for every aspect of our
Constitution as the supreme law of the Republic are real.
Her investigative powers are not supposed to bow down to anybody, not even
at the door of the highest chambers of raw State power...
... The purpose of the office of the Public Protector is therefore to help uproot
prejudice, impropriety, abuse of power and corruption in State affairs, all
spheres of government and State controlled institutions. The Public Protector
is a critical and indeed indispensable factor in the facilitation of good
governance and keeping our constitutional democracy strong and vibrant.”
[109] The Report by the PP did not address the major issues raised in the
complaints, nor the numerous indications of irregularities. In this instance the PP did
nothing to assure the public that she kept an open and enquiring mind and that she
discovered, or at least attempted to discover the truth.
THE REMEDIAL ACTION PROPOSED BY THE PP
[110] The Public Protector directed the following remedial action to be taken:
"7.1
The Premier of the Free State Province [i.e. Mr Ace Magashule] must:
7.1.1 Initiate and institute disciplinary action against all implicated
officials involved in the Vrede Dairy Farm project;7.1.2 Submit the report regarding the remedial action in 7.1.1 to the
Public Protector after the conclusion of the disciplinary processes;
7.1.3 Ensure that he conducts a reconciliation of the number of cows
initially procured and found during April 2017 as per his undertaking
(…);
7.1.4 Ensure that he submits an implementation plan within 30 days of
the issuing of this report.
7.2 The Head of the Free State Department of Agriculture [i.e. Mr
Mbana Peter Thabethe] must:
7.2.1 Ensure that the officials of the Supply Chain Management
Division and Management of the Department are trained on the
prescripts of the National and Provincial Treasuries in respect of
procurement and specifically in respect of deviations;
7.2.2 Take corrective measures to prevent a recurrence of the failure of
the management proc ss referred to in this report;
7.2.3 Ensure that all Departmental staff involved in the implementation
and execution of Projects are properly trained and capacitated to
manage Projects assigned to them;
7.2.4 Develop and revise current policies for the implementation of
internal control measures in line with Treasury prescripts and
regulations.”
[111] The Applicants, in both applications took issue, not surprisingly, with the fact
that the Premier and the Head of Department, Mr Thabethe, who were both
implicated in the Project were tasked with taking disciplinary actions, corrective
measures and departmental training to avoid a recurrence of the incident.
[112] The result was that it was left to the Premier, who was himself implicated, to
determine who constituted an "implicated official". Despite admitting that he was an
implicated official, the PP failed to identify Mr Thabethe in the findings as a primary
instigator in the scheme and held responsible as the accounting officer.
[113] The PP, in order to justify her stance pertaining to the remedial action in
respect of the HOD, stated that the Executive Authority (ie the MEC) has no power to
discipline a provincial HOD. She contended that, only the Premier has that power in
terms of the Public Service Act. However, this legal conclusion is obviously incorrect.
Under the Public Finance Management Act 1 of 1999 ("the PFMA"), read with the
National Treasury Regulations, the head of department, as the "a<;;counting officer"
is accountable to the Executive Authority responsible for the department. The MEC is
specifically empowered to commence investigations and take disciplinary action
against the accounting officer in the event of alleged financial misconduct.
[114] The provisions of the Public Service Act (sections 16A(1)(a) and 16B(1)(a))
similarly provide that " the relevant executive authority" is responsible for taking
disciplinary action against the head of department. The "executive authority" in
relation to a provincial department is defined to mean °the member of the Executive
Council responsible for such portfolio".
[115] Secondly, the PP contended that she referred generally to "implicated
officials”, because she "wanted to ensure that all officials who worked on the project
are not excluded from disciplinary action". But this did not explain the removal of the
specific direction in the provisional report that disciplinary action be taken against the
HOD, who played a pivotal role in the alleged irregularities that occurred.
[116] The removal of this specific direction was especially inappropriate and
irrational given that the PP afforded the Premier, the discretion to determine who the
"implicated officials" were as already stated. This must be seen in the context that the
Premier had recorded in his response to the section 7(9) notice that there was "no
credible basis for taking disciplinary steps against the Head of Department". This
position taken by the Premier should have deeply concerned the PP and should have
influenced her consideration of appropriate remedial actions. To put people who are
implicated in wrongdoing in a position to investigate that very same wrongdoing, is
absurd and goes against every known principal of law and logic.
[117] In the provisional report, the PP directed that the disciplinary action was to be
taken by the HOD against the incumbent and implicated HOD, Mr Tthabethe, as he
was "an implicated official''.
[118] This remedial action was removed by the PP in her final Report and in so
doing she rendered the remedial action that was required to be implemented by the
HOD, ineffective and irrational, the instructions to the HOD could not be expected to
be properly implemented or achieve their purpose, unless coupled with the specific
requirement that the incumbent HOD be subjected to disciplinary action.
[119] The PP's third change to the remedial action in the provisional report was the
removal of the requirement that the Premier and the MEC must "ensure that the
findings of the Accounting General are noted and the recommendations as
mentioned in his report of January 2013 are implemented'. This referred to the report
prepared by Treasury's Specialised Audit Services arid ENS Forensics. The Treasury
report had recommended that:
a. disciplinary action be taken against the HOD, Mr Thabethe for his role in
concluding the agreement between the Department and Estina and for
committing the Department financially, without ensuring that funds were
available;
b. disciplinary action be taken against the Department's Chief Financial Officer,
Ms Dhlamini for failing to ensure that proper financial oversight and controls
were in place before transferring funds to Estina;
c. no further money was to be invested in the project until the risk factors
identified ln the report were addressed;
d. the project must be reassessed and the necessary due diligence completed to
ensure that the project is viable, with various specific steps to be taken for the
reassessment.
[120] The PP did not give any explanation for the removal of the aforesaid action
proposed in her answering affidavit.
[121] In the provisional report, it was proposed that matters be referred for further
investigation to other appropriate public authorities. All such remedial action was
removed from the Report. The PP made several arguments to justify these
amendments. She inter alia contended that there was no need to investigate the
political leadership in the Province, because "there was nothing in the main
complaint, second complaint or the Provisional Report which implicated the Premier'.
[122] This answer is factually incorrect, for various reasons. In his first and second
complaints, the Complainant raised concerns about the lack of transparency, noncompliance with procurement law, and the failure to obtain value for money in the
implementation of the Project. The complaint was levelled against the "Free State
Provincial Government" in general. The fact that he did not mention the Premier
specifically did not mean that the Premier was not implicated in the complaints, as he
was the Premier of the Free State Provincial Government and as such, the head of
the Provincial Government, who was instrumental in the conclusion of the suspect
agreements and who ensured that the irregular payments were made.
[123] The Premier's personal involvement in promoting the Project md the close
association between the Premier (through his son, Tshepiso Magashule, who was
employed by the Gupta family) and the Guptaassociates involved in Estina, was
reported in the media from as early as 2013. Likewise, Mr Zwane's direct
involvement in facilitating the Project, and the allegations of kickbacks from the
Gupta family was a matter of public record.
[124] The PP did not explain her failure to investigate, or at least to refer to another
authority to investigate, the allegations in the Complainant's third complaint. These
included the specific allegations that the Estina contract '' was approved by the le9al
department in the Office of the Premier: and that the National Treasury's findings and
recommendations had been "ignored by the provincial government and the Premier'.
It must also be noted, as already stated, that the Premier in his response to the
section 7(9) notice, disregarded Treasury's findings and recommendations.
[125] The PP contended that the remedial action in respect of the SIU had "been
overtaken by events" specifically because: "The idea of sending these matters for
investigation to the SIU was to recover irregular expenditure. But by the time the final
report was finalised the recovery of irregular expenditure was already under way by
the Hawks and the SIU."
[126] The remedial action directed in the provisional report in respect of the SIU was
not merely "to recover" irregular or illegal expenditure. It was considerably broader,
and reads as follows:
"The Head of the Special Investigating Unit to: Conduct a forensic
investigation into serious maladministration in connection with the Vrede Dairy
Integrated Project of the Free State Department of Agriculture, the improper
conduct by official of the Department and the unlawful appropriation or
expenditure of public money or property with the view of the recovery of los es
by the State”.
[127] The PP justified her decision not to investigate the third complaint that was
lodged on 10 May 2016, because, she said, it was too late to do so. One must in this
regards note that the final report was only issued in February 2018. It is
inconceivable that, having regard to the dates, she could seriously contend that it
was too late for her proper consideration.
[128] The removal of the remedial action in the provisional report. referring the
matter for further investigation by the SIU, (to conduct a forensic investigation, into
serious maladministration, improper conduct and unlawful expenditure) and to the
Auditor-General (to conduct a forensic and due diligence audit verifying the
expenditure of public money), was explained by the PP as follows: the reason that
Adv Madonsela referred these matters for investigation to the SIU was to recover
irregular and illegal expenditure, and by the time the final report was finalised, that
was already underway by the Hawks and Asset Forfeiture Unit (the "AFU") and had
thus been ''overtaken by events". It was incorrect to state, as the PP did, that the
remedial action was "overtaken by events". Even if the SIU and the Hawks had
commenced an investig11tion to recover money unlawfully obtained under the
Project, they were no longer required by the PP to do so.
[129] It is crucial to note that these remedies were removed from the provisional
Report before the PP was even aware of any parallel investigations, which
immediately causes one to doubt the truthfulness of this explanation. The aforesaid
is clear, because they had already been removed from the Report when the section
7(9) notices were sent to the Premier and Mr Thabethe, among others, on 7 June
2017.
[130] The investigation into improper conduct by officials, which the PP claimed she
could not undertake previously, because of financial and resource constraints, would
have been referred in the provisional report to the SIU for investigation. The PP
omitted that remedial action.
[131] CASAC argued that the PP was mistaken that the SIU investigation proposed
in the provisional report was only about recovering irregular and illegal expenditure: It
was instead aimed to secure the recovery of losses. It expressly included a forensic
investigation into "serious maladministration" and, more importantly, "the improper
conduct by officials of the Department”. This argument is clearly correct. The
instruction to the SIU was coupled in the provisional Report, with a reporting
obligation and ongoing monitoring by the PP. The provisional Report stated that " The
referral of the report to the Special Investigation Unit and the Auditor-General will be
monitored on a bi-monthly basis”.
[132] The PP stated that 'The remedial action involving the SIU and the Auditor
General were removed because I considered that I did not have the power to instruct
either of them to conduct an investigation on my behalf”.
[133] That remedial action was successfully challenged on review in the matter of
ABSA Bank. However the judgment in that matter was given on 16 February 2018,
after the Report was published. In those proceedings, the PP had defended the
remedial action as being within her powers.
[134] In the ABSA Bank matter, the Court noted that the provisions of the Special
Investigating Units and Special Tribunals Act 74 of 1996 (the SIU Act) are important
in assessing remedial action directed at the SIU. Section 2 of the SIU Act provides
that the President may establish special investigating units. Section 4 refers to the
functions of a SIU whereas section 5 sets out the powers of such a unit. Subsection
(6)(b) provides:
"The Head of a special investigating unit may refer any matter which, in his or
her opinion, could best be dealt with by the Public Protector, to the Public
Protector and the Public Protector may, if he or she deems it appropriate, refer
any matter which comes to his or her attention and which falls within the terms
of reference of a special investigating unit, to such unit."
[135] The Court interpreted this provision as follows :
"Again the operative words applying to both a SIU and the Public Protector
are 'may refer'. This subsection allows the Public Protector and the head of a
SIU to refer matters to one another. The SIU is a statutory institution
established by the President in terms of section 2 of this Act. It has, like the
Public Protector, only those powers assigned to it by statute. This subsection
does not create a hierarchy between the two. Each can bring a matter to the
attention of the other, but neither can instruct the other on how to deal with a
matter.'"
[136] In Absa Bank the Court also considered the wording of s 6(4)(c) of the PP
Act, which empowers the PP "to bring to the notice of and to refer any matter, or to
make an appropriate recommendation to another public body or authority, The Court
said:
"It does not empower the Public Protector to be prescriptive or to instruct the
SIU as to how to deal with the matter she brings to its notice. Once the Public
Protector has referred a matter to the SIU, or has made an appropriate
recommendation, she has exhausted her powers under this subsection. The
decision as to how the matter must be handled is not that of the Public
Protector, but the prerogative of the public body or authority concerned, in this
instance the SIU.”
[137] Although the PP is clearly empowered to refer a matter to the SIU for
investigation, as is specifically provided for in section 5(6)(b) of the SIU Act. The
effect of the ABSA Bank decision is that it is not open to the PP to instruct the SIU
how to exercise its powers, as she had purported to do in the Report in that matter.
[138] As regards the Treasury report, the PP contended that the remedial action
directed at this office in the provisional report was incompetent, because "the AuditorGeneral does audits of accounts and financial statements. He does not do forensic
and due diligence investigation ."
[139] Section 188 of the Constitution, states that "the Auditor-General may audit and
report on the accounts, financial statements and financial management of … '' (b)
any institution that is authorised in terms of any law to receive money for a public
purpose'' [Court's emphasis.]
[140] It is accordingly clear that the PP's contention in this regards is incorrect. The
Public Audit Act no 25 of 2.004 further defines the powers and functions of the
Auditor-General. Section 4 of the Act defines the Auditor-General's constitutional
functions. Section 5 of the Public Audit Act defines the " other functions" that are
extended to the Auditor General under the Act These include the power, under s 5(1)
(d) (read with s 29) "to carry out an appropriate investigation or special audit of any institution
referred to in section 4(1) or (3) [which includes provincial state departments
and administrations] if the Auditor-General considers it to be in the public
interest or upon the receipt of a complaint or request".
[141] Accordingly, the Auditor General is vested with special investigative powers,
which extend beyond its regular auditing function, and which may be exercised in the
public interest and on request.
[142] Furthermore the PP contended that she did not have the legal power to
instruct either the SIU or the Auditor-General to conduct an investigation. This
interpretation of the law is incorrect as section 5(4)(c) of the PP Act expressly
empowers the PP to, at any time prior to, during or after an investigation, refer any
matter to the appropriate public body or authority to make an appropriate
recommendation,
[143] The PP was clearly aware of this fact, as she included the following in her final
Report:
"There is nothing in the Public Protector Act or Ethics Act that prohibit the
Public Protector from instn1cting another entity to conduct further
investigation, as she is empowered by section 6(4)(c)(ii) of the Public
Protector Act'.
[144] The Court held in Nkandla as follows, "[i]t ought to be borne in mind that the
Public Protector regularly instructs members of the executive, including high ranking
government officials, to exercise discretionary powers assigned by law to them." In
that case, the Court was provided with various examples where the Public Protector
"had instructed. organs of state to perform functions that are ordinarily left to their
discretion".
[145] The PP committed yet another error of law, when she assumed that she
lacked such a power. The evidence suggested, that she was aware that she
possessed the power, but elected nevertheless to exclude the remedial action.
[146] In the light of the analysis set out above I am of the view that the remedial
action in the report obviously did not constitute an effective remedial action. It did not
redress or undo "prejudice impropriety, unlawful enrichment or corruption" that
occurred during the project. In Nkandla the following was said regarding appropriate
remedial actions:
“[68] Taking appropriate remedial action is much more significant than making
a mere endeavour to address complaints as the most the Public Protector
could do in terms of the interim Constitution. It connotes providing a proper,
fitting suitable and effective remedy for whatever complaint and against
whomsoever the Public Protector is called upon to investigate. However
sensitive, embarrassing and far-reaching the implications :o f her report and
findings, she is constitutionally empowered to take action that has that effect,
if it is the best attempt at curing the root cause of the complaint Remedial
action must therefore be suitable and effective. For it to be effective in
addressing the investigated complaint, it often has to be binding. In SABC v
DA the Supreme Court of Appeal correctly observed:
'The Public Protector cannot realise the constitutional purpose of her
office if other organs of state may second-guess her findings and
ignore her recommendations. Section 182(1)(c) must accordingly be
taken to mean what it says. The Public Protector may take remedial
action herself. She may determine the remedy and direct the
implementation. It follows that the language, history and purpose of s
182(1)(c) make it clear that the Constitution intends for the Public
Protector to have the power to provide an effective remedy for state
misconduct, which includes the power to determine the remedy and
direct its implementation.
[69] But, what legal effect the appropriate remedial action has in a particular
case depends on the nature of the issues under investigation and the findings
made...."
[147] An analysis of the aforesaid illustrates the many failure of the PP in the
conclusions she arrived at and the ineffectiveness of the remedial action proposed by
her.
CONCLUSION
[148] The PP accused the DA of having political motives, while it is definitely not
inconceivable and even probable that such an agenda may exist, the PP should rise
above any political agenda real or perceived and should look objectively at the
complaints lodged, irrespective of where it may emanate from, and whatever the
political objectives may be. Anyone, including any political party, should feel confident
that the PP will investigate any legitimate complaint properly and objectively. The PP,
like judicial officers, should transcend criticism and act without fear, favour and
prejudice in al! matters that come before them. The public should rest assured that
those that preside over them or investigate their complaints will always execute their
duties with due regard to the principles of the Constitution and the Rule of law.
[149] Regarding the question of rationality it is important to note what was stated in
Pharmaceutical Manufacturers Association of South Africa & others vs
President of the Republic if South Africa & others explained, "[d]ecisions must be
rationally related to the purpose for which the power was given, otherwise they are in
effect arbitrary and inconsistent with this requirement. "
[150] Accordingly, the starting point is to determine what the purposes are of the
PP's powers and functions generally, and her powers to investigate and take
remedial action specifically.
[151] The purpose of her- specific power to investigate and report is to discover and
expose evidence of corruption md prejudice, with a view to maintaining an effective
public service and good governance. The purpose of her power to devise and
implement remedial action is to remedy instances of corruption and prejudice, to
ensure that those responsible are held accountable and that those affected obtain
appropriate relief and to prevent re-occurrence of the same conduct.
[152] Given the above, in my view the Report is unlawful and unconstitutional and
as a result fails to comply with the requirement of legality. In particular, the PP has
failed to comply with section 6 of the PP Act and section 182 of the Constitution. This
follows because of her failure to properly investigate the complaints of 12 September
2013 and 2.8 March 2014, seen together with her failure to use her statutory powers,
and to adopt the stance of a proactive investigator. She contravened section 6(4)(a)
and 6(5) of the Public Protector Act and section 182(1)(a) and (b) of the Constitution.
[153] The failure to properly investigate the complaints of 12 September 2013 and
28 March 2014 was plainly irrational, in that it was not rationally related to the
purpose of the PP or her specific powers to investigate and report, it was also not
rationally related to the information before her, which provided at least prima facie
evidence of corrupt activity. Relevant considerations were ignored which point to
irrationality. There had also not been a correct application of the law as was set out
above.
[154] The failure to have regard at all to the complaint of 10 May 2016, or to have
regard to the information in the public domain of evidence implicating high ranking
public officials and the Gupta family in corruption was irrational in that the facts
ignored related directly to the serious allegations of corruption and malfeasance in
the Project and were patently relevant
[155] Her proposed remedial action, which envisaged that implicated senior officials
act as the arbiters of disciplinary proceedings and procurement training, contravened
section 6(4) of the PP Act and section 182(1)(c) of the Constitution, in that it failed to
devise a remedy that was appropriate, proper, fitting, suitable or effective, as a result
her failure to devise an appropriate, proper, fitting, suitable or effective remedy was
irrational.
[156] The PP's belief that she was not empowered to take r medial action referring
the mc1tter to another organ of state for further investigation constituted a profo1Jnd
mistake of law as fully explained above.
[157] It is now trite that a Report of the PP is legally binding and of full force and
effect until it has been reviewed and set aside. Section 172 of the Constitution
provides the starting point. In term of section 172(1)(a), as a matter of constitutional
principle, an invalid decision must be declared invalid.
[158] Following a declaration of invalidity, this Court has the power to order a just
and equitable remedy under section 172(1)(b). As a default position, the just and
equitable relief must be aimed at correcting or reversing the consequences of the
invalid exercise of public power:
"Logic, general principle, the Constitution, and the binding authority of this
Court all point to a default position that requires the consequences of invalidity
to be corrected or reversed where they can no longer be prevented. It is an
approach that accords with the rule of law and principle of legality."
[159] Having found that an exercise of public power is constitutionally invalid, the
court must grant appropriate relief that is corrective of the consequences of
unlawfulness. This demands that the report be declared invalid, reviewed and set
aside. Due to the specific circumstances in this case it will not be appropriate to refer
the matter back to her.
[160] As a result I make the following order:
1. It is declared that in investigating and reporting on the Vrede Dairy
Project for purposes of her report No 31 of 2017/18, dated 8 February
2018, the PP failed in her duties under section 6 and 7 of the Public
Protection Act and section 182 of the Constitution.
2. The PP's report No 31 of 2017/18 date 8 February 2018 is accordingly
reviewed, set aside and declared unlawful, unconstitutional and invalid.
3. The costs order is postponed sine die.
_________________
RG TOLMAY
JUDGE OF THE HIGH COURT
DATE OF HEARING: 23 - 24 October 2018
DATE OF JUDGMENT: 20 May 2019
CASE NO: 11311/2018
ATT FOR APPLICANT: MINDE, SHAPIRA & SMITH ATTORNIEYS
ADV FOR APPLICANT: S BUDLENDER et J BLEAZARD C TABATA
ATT FOR RESPONDENT: TSHISEVHE GWINA RATSHIMBlLANI INC
ADV FOR RESPONDENT: V NGALWANA (SC) et F KARACHI et L RAKGWALE
CASE NO: 13394/2018
ATT FOR APPLICANT: LEGAL RESOURCES CENTRE
ADV FOR APPLICANT: M LE ROUX et M MBIKIWA
ATT FOR RESPONDENT: TSHISEVE GWINA RATSHIMBILANI INC
ADV FOR RESPONDENT: A PLATT (SC) et C DAUDS